Google's Schmidt talks up the transformative power of connectivity

BARCELONA -- Rather than spend a lot of time talking about Google, Android OS or even recent changes in the company's privacy policies, Executive Chairman Eric Schmidt used his Mobile World Congress keynote to highlight the need for bringing greater Internet connectivity to the world's most under-served markets.

While light on news, the theme resonated with the uber-connected mobile elite attending the industry's marquee event in Barcelona. This year, there's lots of talk on the ground and in breakout sessions about how to reach the five billion people on the planet who have no access to the Internet and how greater cross-industry connectivity could improve public health, transportation, business and democracy worldwide.

"The World Wide Web has not lived up to its dream," he said, noting the billions of people who have limited access to the Internet and have no yet experienced the joys of playing Angry Birds or doing Google searches (yes, he really did say that).

ďFor many people the Web is still a scarce resource," he noted. "Developers are the builders of human freedom."

Probably to the disappointment of some in the room, Schmidt didn't mention anything about future OS plans.

Although Android 4.0 (Ice Cream Sandwich) is barely loaded up on all Android-based devices, there's already buzz about what could be in the pipeline. Rumors about the Android 5.0, code name Jelly Bean, picked up this week at MWC. Pictures of a meeting-room bowl decorated with Android's little green mascot and filled with jelly beans popped up around the Internet, giving a visual clue about the name Google may be planning for its next OS iteration. Curious to see if Schmidt would tip his hat and talk about 5.0's timing -- and well, because it's Google, attendees began queuing outside the auditorium 90 minutes before the keynote.

Once on stage, Schmidt called up Hugo Barra, Android's product management director. Barra shared the spotlight for a few minutes and announced that the Google Chrome browser was in beta on Ice Cream Sandwich phones.

Some of the more interesting tidbits came up during the extended question and answer session when Schmidt, known for his sometimes colorful, off-the-cuff commentary, could talk directly with the crowd.

For instance, Schmidt alluded to the number of Android activations Andy Rubin, senior vice president of mobile and digital content posted on a blog on Monday. Rubin wrote, "With a year-on-year growth rate of more than 250%, 850,000 new Android devices are activated each day, jetting the total number of Android devices around the world past 300 million. These numbers are a testament to the break-neck speed of innovation that defines the Android ecosystem." Schmidt joked: "You do the math and compounding, and it will eventually be a trillion...We need more people."

When asked if Android would be available on feature phones, Schmidt answered, "A better question is, 'When will smartphones cost what feature phones cost?' The answer is: next year.' He added that the dropping price of device hardware and Moore's Law would soon make smartphones a more attractive and affordable option for many people in the world.

There is no argument that Apple iPhone 3G set the beginning of smartphone era, which date back to July 2008. Sales record shows thriving since Q4 2008. By 2013, smartphone era will have its 5 years anniversary. The product will likely enter the commodity stage, thinner profit margin and, steady growth or slow growth of the over all market size. If it is true, Schmidt prediction of price dropping will come true.
Questions then
1) What would Apple do to maintain their high profit margin status? Will they create a new product and a new market? What would it be?
2) How would Nokia-Microsoft alliance react to the change of the market?
3) What's the market share going to be like before end of 2013?